CATCHWORDS

CORPORATIONS - external administration - voluntary administration - meetings of creditors - power of court to extend time for creditor's meeting convened under s 439A of the Corporations Law.

Corporations Law ss 439A, 439B and 447A

Cawthorn v Keira Constructions Pty Ltd (1994) 33 NSWLR 607

Re Brashs Pty Ltd (1994) 15 ACSR 477

Re Taylor (1995) 13 ACLC 313

IN THE MATTER OF DOUBLE V MARKETING PTY LIMITED (IN ADMINISTRATION)

No NG 3144 of 1995

Lindgren J

Sydney

24 March 1995

IN THE FEDERAL COURT OF AUSTRALIA)

NEW SOUTH WALES DISTRICT REGISTRY)        No NG 3144 of 1995

GENERAL DIVISION                  )

IN THE MATTER OF: DOUBLE V MARKETING PTY LIMITED (IN ADMINISTRATION)

AUSTRALIAN COMPANY NO: 002 972 910

The application of

SCHON GREGORY CONDON AS ADMINISTRATOR OF DOUBLE V MARKETING PTY LIMITED (IN ADMINISTRATION)

                           Applicant

CORAM:    Lindgren J

PLACE:    Sydney

DATE:     24 March 1995

                      MINUTE OF ORDERS

THE COURT:

1.   Grants leave to the applicant to file application and supporting affidavit of Paul Russell sworn 24 March 1995, in Court.

2.   Directs the solicitor for the applicant to substitute for that affidavit, being a copy only, the original affidavit within five days from today's date.

3.   Notes the applicant's solicitor's undertaking to pay the filing fee to the Registry.

4.   Orders that the time provided for in sub-s 439B (2) for adjournment of a meeting convened under s 439A be extended to 25 April 1995 in the case of the meeting of Double V Marketing Pty Limited (in administration) first held on 24 January 1995.

5.   Orders that leave be reserved to any person claiming to be interested, including any creditor of Double V Marketing Pty Limited (in administration) and the Australian Securities Commission, to make such application as he, she or it may be advised, to vary these orders upon 24 hours' notice to the applicant.

NOTE:     Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA)

NEW SOUTH WALES DISTRICT REGISTRY)        No NG 3144 of 1995

GENERAL DIVISION                  )

IN THE MATTER OF: DOUBLE V MARKETING PTY LIMITED (IN ADMINISTRATION)

AUSTRALIAN COMPANY NO: 002 972 910

The application of

SCHON GREGORY CONDON AS ADMINISTRATOR OF DOUBLE V MARKETING PTY LIMITED (IN ADMINISTRATION)

                           Applicant

CORAM:    Lindgren J

PLACE:    Sydney

DATE:     24 March 1995

                    REASONS FOR JUDGMENT

On Friday 24 March 1995, there came before me as duty judge an ex parte application by Schon Gregory Condon in his capacity as administrator of Double V Marketing Pty Limited (in administration) (I will refer to him as "the Administrator" and "the applicant" and to it as "the Company") for an extension of the maximum period for which a meeting of the Company's creditors convened under s 439A of the Corporations Law ("the Law") may be adjourned.  Sub-section 439B (2) of the Law provides for a maximum period of 60 days after the first day on which the meeting is held.  As will appear, the first day on which the meeting was held in the present case was 24 January 1995, and so the period of 60 days expired on Saturday 25 March 1995.  I made orders as appear below and said that I would publish my Reasons later.  These are those Reasons.

The applicant was appointed as administrator of the Company on 28 December 1994.  He was appointed by writing under the Company's common seal and the board unanimously resolved that the Company was likely to become insolvent in the future and that an administrator be appointed by the Company (see s 436A of the Law).

External administration of a corporation is provided for in Chapter 5 of the Law.  In particular, Part 5.3A provides for administration of a Company's affairs with a view to execution of a deed of company arrangement.  Within that Part, Division 5 provides for the convening by an administrator of meetings of creditors to decide the company's future.  Section 439A obliges an administrator to convene a meeting of the company's creditors within "the convening period" as fixed by sub-s (5) or extended under sub-s (6) of that section.

The evidence shows that the Administrator convened a meeting of the Company's creditors within the "convening period" as fixed by sub-s 439A (5), namely 28 days beginning on 28 December 1994.  In fact the meeting was held on 24 January 1995.  It was adjourned to 20 February 1995 and yet further adjourned to 6 March 1995 and further adjourned to Friday 24 March 1995. 

Sub-section 439B (2) provides as follows:

     "439B(2)A meeting convened under section 439A may be adjourned from time to time, but cannot be adjourned to a day that is more than 60 days after the first day on which the meeting was held, ..."

The applicant asks that I extend the period of 60 days referred to in this provision to 25 April 1995.

Do I have power to grant the relief sought?  In my opinion I do.  Section 447A within Part 5.3A provides as follows:

     "The Court may make such order as it thinks appropriate about how this Part is to operate in relation to a particular company."

In Cawthorn v Keira Constructions Pty Ltd (1994) 33 NSWLR 607, after giving an account of the background to the enactment of s 447A, Young J held that the section gave power to extend the maximum period fixed by sub-s 439B (2).  His Honour's construction of s 447A was referred to with approval by Hayne J in Re Brashs Pty Ltd (1994) 15 ACSR 477.  In Re Taylor (1995) 13 ACLC 313, Brownie J accepted that there was power in the court to extend the maximum period of 60 days fixed by sub-s 439B (2).  As Hayne J observed in Re Brashs Pty Ltd, supra, at 483, referring to ASC v Marlborough Gold Mines Ltd (1993) 177 CLR 485, "[t]he need for uniformity in judicial decision in matters arising under the Corporations Law is self evident".

Should I grant the relief sought?  The evidence shows as
follows.  In or about January 1995 the Administrator became aware that VI.SA. Australia Pty Limited ("VI.SA.") which had been a customs agent of the Company, claimed to be entitled to the benefit of a lien over certain goods which would otherwise have formed part of the Company's ordinary trading stock ("the Goods").  The Goods had a retail value, if sold by the Company, of approximately $130,000 and payment for them had already been made by the Company.  The availability of the Goods for the Company's general trading purposes had a substantial impact on its financial position.  On the basis of information received from the Company's directors, the Administrator commenced proceedings in the Equity Division of the Supreme Court of New South Wales number 1215 of 1995 for delivery up by VI.SA. of the Goods.  Those proceedings were heard by Santow J on 13, 16 and 17 February 1995.  His Honour delivered judgment on 6 March, declining to make the orders sought by the Administrator.  It was because his Honour's decision was expected on 6 March 1995, that the meeting was adjourned to 24 March.

There was in evidence a five page letter of advice from the Administrator's solicitors, Robinson Creais, outlining bases on which a liquidator of the Company might successfully attack the lien.  In the light of the complex legal issues raised, the Administrator was not in a position on 24 March to provide the report and statement required by sub-s 439A (4) of the Law.  Moreover, the Company's directors informed the Administrator that they needed a further period not exceeding
14 days in which to finalise a proposal and recommendation to creditors.  The proposal for an adjournment to 25 April 1995 was put to the meeting of creditors held on 24 March and a majority of creditors voted in favour of that adjournment, subject to the Court's approval.  There was no evidence of any prejudice to any creditor.

In my view the evidence favours my extending the period of 60 days referred to in sub-s 439B (2) to 25 April.  But, like Brownie J in Re Taylor, supra, I think that this should be subject to a condition reserving leave to any person claiming to be interested, including, in particular, any creditor of the Company and the Australian Securities Commission, to make such application as he, she or it may be advised to vary the order upon 24 hours' notice to the Administrator.

For the foregoing reasons, on 24 March 1995, I made the following orders:

1.   Grant leave to the applicant to file application and supporting affidavit of Paul Russell sworn 24 March 1995, in Court.

2.   Direct the solicitor for the applicant to substitute for that affidavit, being a copy only, the original affidavit within five days from today's date.

3.   Note the applicant's solicitor's undertaking to pay the
filing fee to the Registry.

4.   Order that the time provided for in sub-s 439B (2) for adjournment of a meeting convened under s 439A be extended to 25 April 1995 in the case of the meeting of Double V Marketing Pty Limited (in administration) first held on 24 January 1995.

5.   Order that leave be reserved to any person claiming to be interested, including any creditor of Double V Marketing Pty Limited (in administration) and the Australian Securities Commission, to make such application as he, she or it may be advised, to vary these orders upon 24 hours' notice to the applicant.

             I certify that this and the preceding 5 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.

             Associate:

             Dated:         30 March 1995

Heard:       24 March 1995

Place:       Sydney

Decision:    24 March 1995

Appearances:Mr S Byrne, solicitor of Robinson Creais appeared for the applicant.